Here at Freelance Folder we publish an awful lot of posts on freelance rates. Some of our past posts on rates include:
- How to Set Your Freelance Rates
- Get Your Clients to Stop Comparing Rates
- 3 Reasons Your Rates Are Still Low (And How to Start Raising Them)
- Will You Raise Your Rates in 2010?
- 3 Reasons You Shouldn’t Raise Your Rates
- Why You Must Quote a Ballpark Figure
We discuss rates often because rates are such a crucial topic to freelancers. How much you charge for your services ultimately dictates how much money you can earn as a freelancer. Lately, I’ve been hearing a lot of discussion about how freelancers need to lower rates in order to get more business. Usually, the economy is cited as the reason why rates should be lowered. You know what? I don’t buy it. I don’t think that lowering rates is a good move for a freelancer. In this post, I’ll explain why.
The Wrong Question
I open this post by asking whether lower rates mean more clients. I gave that title to this post for a reason. That’s often the phrase that I hear when people talk about lowering rates. However, I think it’s the wrong question for a freelancer to ask. The real question should be: will lowering my rates help my freelancing business to thrive? The answer to the first question, about whether lower rates will net you more clients might possibly be “yes.” But, it’s a flawed question because, as a freelancer, you only have a limited amount of time. Unless you are an agency with a huge team that is willing to work for peanuts (i.e., low wages), there is probably a limit to how much work you can actually accept. One of the aspects that makes most freelancers unique is that they can spend more time and give better personal attention to projects–time and attention that a larger entity is unlikely to provide. However, they can only offer this benefit to their clients if they are charging an adequate rate for their services.
A Look at the Right Question
If you examine the question of whether lowering your rates will help your freelancing business to thrive, the answer is usually “no.” Sure, you may be able to scrape by on lower rates for a time–but, eventually lowering rates will catch up with you. You will have no money to invest back into your business. Here are some of the ramifications of that:
- If your equipment wears out or become obsolete, there are no funds to replace it
- Your skills may fall behind because you have no budget to invest in training materials
- You’ll work harder to earn the same money and as a result probably cut back on your marketing efforts
- If a personal emergency arises you won’t have the finances to deal with it
But, Work Isn’t Coming In
A work slowdown can be really scary to a freelancer. Even a work slowdown of a few days can cause bring a little fear into the mind of an experienced freelancer. For a new freelancer a slowdown can be almost paralyzing–Unless… Unless you planned for it. That’s right, you need to plan for work slowdowns. To plan for a slowdown, I recommend the following:
- Set aside a portion of your income. When a famine period hits your business this savings fund will help to see you through.
- Don’t discontinue marketing efforts. The biggest mistake a freelancer can make is to stop marketing themselves.
- Have a personal project. Filling your time with a personal project during slow times can keep you from dwelling on the situation.
Remember, if your business has been successful so far your work slowdown is most likely a temporary setback.
When You May Want to Discount Your Work
While I’m generally opposed to lowering rates simply to bring in more business, I do think that there are a few legitimate instances when a freelancer might choose to offer a discount to a client:
- You are offering a limited time sale
- The client offers a byline (for writers)
- The client has referred additional clients to you
- The client provides you with a testimonial
- The client is offering you a long-term contract
- The client agrees to reduce the amount of work required
What About You?
Do you believe that lower rates mean more business? Why, or why not? Have you lowered your rates due to the economy (or any other reason)? If so, what was the result? Share your thoughts and experiences in the comments. Image by Brian Lane Winfield Moore